PART TWO: REVIEWAnnual OF ReportTRENDS 2004-05 AND OPERATIONS
1. PRIMARY SECURITIES MARKET Excluding offer for sale, the total amount The primary segment of the capital mobilised in 2004-05 was Rs. 25,056 crore, market was characterised by heightened which was more than three times higher than activities during 2004-05. Strong fundamentals that of Rs. 8,023 crore in the previous year. of the economy, encouraging corporate This indicates the revival of investors’ interest results, buoyant secondary market, revival of in the primary market. The number of issues structural reforms by the government and an was also higher at 60 in 2004-05 than that of investor friendly regulatory framework 57 in 2003-04. Out of 60 issues, 34 were provided by SEBI attracted the investors to public issues (consisting of 23 IPOs and 11 the primary market. Several mega issues listed issues) and the remaining 26 were apart, a number of small issues entered the rights issues. market. There has been overwhelming The public issues continued to remain as response to most of the public issues from the dominant mode of resource mobilisation FIIs, other institutional investors and the retail through which Rs. 24,640 crore was mobilised investors. Large number of the issues was in 2004-05 as compared with Rs. 22, 265 crore over-subscribed indicating the quality of in 2003-04, an increase of 10.7 per cent over issues and the appetite for public issues by the year. However, the share of public issues the investors. The post-listing performance of in the total amount mobilised declined to 87.2 most of the IPOs was encouraging. Unlike per cent in 2004-05 from 95.7 per cent in the previous year, the private sector 2003-04. Of the total public issues in 2004- dominated the primary market during 2004- 05, Rs.13,749 crore was mobilised through 05 and mobilised sizeable amount of the IPO route and Rs.10,891 crore through resources through public and rights issues. subsequent issues by the listed companies (Chart 2.1). There was a quantum jump in the I. Capital Raised during 2004-05 amount mobilised through IPOs in 2004-05 The total amount of capital raised during with its share in total capital moblised rising 2004-05 through public and rights issues from 14.7 per cent to 48.7 per cent. All the (including offer for sale) stood at Rs. 28,256 public issues through IPOs were equity issues crore as compared to Rs. 23,272 crore in while the listed companies mobilised Rs. 7,023 2003-04, an increase of Rs. 4,984 crore or crore through equities and Rs. 3,867 crore 21.42 per cent over the year (Table 2.1). through debt instruments.
Table 2.1: Resource Mobilisation through Public and Rights Issues (Rs. crore) Percentage Share 2003-04 2004-05 in Total Amount Particulars No. Amount No. Amount 2003-04 2004-05 1 234 5 67 Public Issues, of which 35 22,265 34 24,640 95.67 87.20 IPOs 21 3,433 23 13,749 14.75 48.66 Listed 14 18,832 11 10,891 80.92 38.54 Rights Issues 22 1,007 26 3,616 4.33 12.80 Total 57 23,272 60 28,256 100.00 100.00 Memo Item: Offer for Sale 8 15,249 3 3,200 65.50 11.32
30 Part Two: Review of Trends and Operations
During 2004-05, resource mobilisation II. Size and Composition of the through rights issues was Rs.3,616 crore which Issues was three and half times higher than that of The size-wise distribution of capital raised Rs.1,007 crore in 2003-04. As there was an is presented in Table 2.3. While the number exponential growth in the amount mobilised of issues were more for issue sizes up to Rs. through rights issues, their share in the total 100 crore, the amount mobilised continued to amount mobilised jumped from 4.3 per cent in remain high in the cluster between Rs. 100 2003-04 to 12.8 per cent in 2004-05. crore and Rs. 500 crore. During 2004-05, there The sector-wise classification shows that were 2 issues worth Rs.3 crore in the issue the private sector dominated the resource category of less than Rs.5 crore compared to mobilisation efforts in 2004-05 with 60.7 per 6 issues worth Rs.16 crore in 2003-04. In the cent share in the total resource mobilisation, issue size category of between Rs.10 crore followed by the public sector with 39.3 per and Rs.50 crore, there were 16 issues worth cent (Table 2.2). The share of joint sector in Rs.330 crore in 2003-04 which improved to 2004-05 was nil. In 2003-04, the shares of 17 issues worth Rs.461 crore in 2004-05, an private, public and joint sectors were 15.5 per increase of 39.7 per cent. The highest increase cent, 80.2 per cent and 4.3 per cent, was in the range of Rs.50 crore to Rs.100 respectively. Dominance of private sector in crore, within which 11 issues worth Rs.723 the mobilisation of resources from the primary crore was raised in 2004-05 compared to 5 market could be attributed to several factors issues worth Rs.351 crore in 2003-04, an which include, inter alia, resurgence of increase of 106.0 per cent. The amount industrial activities, buoyancy in the secondary mobilised in the issue size category between market, downward rigidity in the lending rates Rs.100 crore and Rs.500 crore declined by of the commercial banks and investors’ 21.4 per cent to Rs.3,594 crore in 2004-05 as confidence in the regulatory system compared with Rs.4,571 crore in 2003-04. The (Chart 2.2). amount mobilised in the above Rs.500 crore
31 Annual Report 2004-05
Table 2.2: Sector-wise Mobilisation of Resources (Rs. crore) Percentage Share 2003-04 2004-05 in the Total Amount Sector No. Amount No. Amount 2003-04 2004-05
1 234 5 67 Private 38 3,619 55 17,162 15.55 60.74 Joint 1 993 0 0 4.27 0.00 Public 18 18,660 5 11,094 80.18 39.26
Total 57 23,272 60 28,256 100.00 100.00
category increased by 30 per cent to year under review. There were seven mega Rs.23,431 crore in 2004-05 as against issues above Rs.1,000 crore which together Rs.17,968 crore in 2003-04. The share of constituted 80 per cent of the total resource above Rs.500 crore category in the total mobilisation. resource mobilisation rose from 77.2 per cent in 2003-04 to 82.9 per cent in 2004-05. III. Industry-wise Resource Mobilisation There were 11 large issues of Rs. 300 Industry-wise, banking/financial institution crore and above, accounting for 87 per cent sector mobilised the largest amount of of the total resources mobilised in 2004-05 resources in 2004-05, both in terms of (Table 2.4). The highest amount mobilised by number of issues and amount mobilised a single public issue was that of NTPC at (Table 2.5). There were 12 issues worth Rs. 5,368 crore, accounting for 22 per cent Rs.11,311 crore in 2004-05 by the banking/ of large issue mobilisation and 19 per cent financial institution sector compared to 11 of the total resource mobilisation during the issues worth Rs.5,428 crore in 2003-04, an
32 Part Two: Review of Trends and Operations
Table 2.3: Size-wise Distribution of Resource Mobilisation (Rs. crore) Percentage Share 2003-04 2004-05 in the Total Amount Issue Size No. Amount No. Amount 2003-04 2004-05
1 234 5 67 < Rs. 5 cr. 6 16 2 3 0.07 0.01 => Rs. 5 cr. &
Table 2.4: Large Issues during 2004-05* (Rs. crore) Date of Percentage Type of Type of Offer Name of the Company Opening Share Issue Instrument Size of Issue in the Total Amount 123456 ICICI Bank Ltd. Public Equity 2-Apr-04 3,500 14.18 TCS Ltd. Public Equity 29-Jul-04 4,713 19.10 Sterlite Industries (India) Ltd. Rights Equity 12-Aug-04 1,972 7.99 National Thermal Power Corporation Ltd. Public Equity 7-Oct-04 5,368 21.76 IDBI Ltd. Public Bond 14-Jan-05 2,118 8.58 ICICI Bank Ltd. Public Bond 27-Jan-05 740 3.00 Jet Airways (India) Ltd. Public Equity 18-Feb-05 1,899 7.70 ICICI Bank Ltd. Public Bond 28-Feb-05 451 1.83 Punjab National Bank Public Equity 7-Mar-05 3,120 12.64 Jaiprakash Hydro-Power Ltd. Public Equity 22-Mar-05 486 1.97 ING Vysya Bank Ltd. Rights Equity 30-Mar-05 307 1.24
Total 24,674 100.00
* Large issues relate to issue size of Rs. 300 crore and above. increase of 108.4 per cent over the previous crore), PNB (Rs.3,120 crore) and IDBI year. This constitutes 40.0 per cent of the (Rs.2,390 crore) (Table 2.6). total resources mobilised in 2004-05 as There were 2 issues worth Rs.5,854 compared with 23.3 per cent in 2003-04. The crore by the power sector in 2004-05 banking/financial institutions, which mobilised constituting 20.7 per cent in the total amount large amount of resources through equities mobilised. The information technology sector and debt issues were ICICI Bank (Rs. 4,978 garnered 18.0 per cent of the total resources
33 Annual Report 2004-05
Table 2.5: Industry-wise Resource Mobilisation (Rs. crore) 2003-04 2004-05 Percentage Percentage Industry Share in Share in No. Amount No. Amount the Total the Total Amount Amount 1234 567 Banking/ FIs 11 5,428 23.32 12 11,311 40.03 Cement & Const. 1 8 0.03 2 169 0.60 Chemical 7 522 2.24 4 128 0.45 Electronics 4 247 1.06 2610.22 Engineering 1 993 4.27 3 133 0.47 Entertainment 2 153 0.66 3 154 0.54 Finance 2 71 0.31 31160.41 Food Processing 1 8 0.03 6 317 1.12 Health Care 1 14 0.06 2 109 0.38 Info. Tech. 9 804 3.45 5 5,095 18.03 Paper & Pulp 0 0 0.00 1600.21 Power 0 0 0.00 2 5,854 20.72 Printing 0 0 0.00 1 130 0.46 Telecom 0 0 0.00 2250.09 Textile 4 61 0.26 000.00 Miscellaneous 14 14,964 64.30 12 4,595 16.26 Total 57 23,272 100.00 60 28,256 100.00
Table 2.6: Resource Mobilisation by Banks and Financial Institutions in 2004-05 (Rs. crore) Percentage Type of Date of Issue Share in Name of the Bank / FI Instrument Issue Opening Size the Total Amount 123456 ICICI Bank Ltd. Equity Public 2-Apr-04 3,500 30.94 The South Indian Bank Ltd. Equity Rights 12-Aug-04 48 0.42 Centurion Bank Ltd. Equity Rights 24-Aug-04 91 0.80 IDBI Ltd. Debt Public 14-Jan-05 2,118 18.72 Dena Bank Equity Public 24-Jan-05 216 1.91 ICICI Bank Ltd. Debt Public 27-Jan-05 740 6.54 The Karnataka Bank Ltd. Equity Rights 4-Feb-05 162 1.43 ICICI Bank Ltd. Debt Public 28-Feb-05 451 3.99 Punjab National Bank Equity Public 7-Mar-05 3,120 27.58 IDBI Ltd. Debt Public 21-Mar-05 272 2.40 ICICI Bank Ltd. Debt Public 26-Mar-05 287 2.54 ING Vysya Bank Ltd. Equity Rights 30-Mar-05 307 2.71 Total 11,312 100.00
34 Part Two: Review of Trends and Operations
mobilised through 5 issues worth Rs.5,095 first quarter of the year. Barring a temporary crore in 2004-05 as compared with Rs.804 phase of turbulent condition around the crore through 9 issues in 2003-04. Though middle of May 2004, the stock market in India there was a decline in the number of issues gradually gathered momentum with by the IT sector, the amount mobilised rose benchmark BSE Sensex crossing 6000-mark sharply by more than six times. Other sectors on November 17, 2004 and reached an all- that witnessed relatively larger increase in the time high of 6915.05 on March 8, 2005 before amount mobilised in 2004-05 over 2003-04 closing at 6492.82 on March 31, 2005 (Table were cement and construction industry, food 2.7 and Chart 2.3). On a point to point basis, processing, healthcare etc. There were no the BSE Sensex posted a return of 16.1 per issues in the textile sector in 2004-05 as cent in 2004-05 on top of 83.4 per cent in against 4 issues worth Rs.61 crore in 2003- 2003-04. The S&P CNX Nifty also recorded 04. The amount mobilised by the engineering a gain of 14.9 per cent in 2004-05 over and sector, electronics sector and chemical sector above the gain of 81.2 per cent in 2003-04. declined considerably in 2004-05 by 86.6 per On an average basis, the returns in 2004-05 cent, 75.3 per cent and 75.4 per cent, were at 27.8 per cent and 26.5 per cent for respectively over the previous year. BSE Sensex and S&P CNX Nifty, respectively. The buoyancy in the stock market was broad 2. SECONDARY SECURITIES based. The price appreciation in terms of S&P MARKET CNX 500 was still higher at 21.6 per cent on a point to point basis and 34.2 per cent on I. Equity Market : An Overview an average basis. The highest price The Indian stock market, which appreciation was witnessed in S&P CNX Mid- witnessed a strong rally in 2003-04, continued cap (73.5 per cent). Strong macroeconomic to maintain its momentum during 2004-05 outlook, encouraging corporate results, high except subdued condition witnessed in the and sustained portfolio investments by the
35 Annual Report 2004-05
Table 2.7: Major Indicators of Indian Stock Markets Percentage Percentage Item 2003-04 2004-05 Variation Variation 2003-04 2004-05 12345 A. Indices BSE Sensex Year-end 5591 6493 83.37 16.13 Average 4492 5741 40.10 27.80 S&P CNX Nifty Year-end 1772 2036 81.18 14.88 Average 1428 1806 37.60 26.47 S&P CNX 500 Year-end 1458 1773 107.88 21.63 Average 1140 1530 52.76 34.21
B. Volatility *(per cent) BSE Sensex 21.51 23.83 – – S&P CNX Nifty 22.84 26.13 – –
C. Total Turnover (Rs. cr.) Cash Segment (All-India) 16,20,497 16,66,896 67.25 2.86 of which BSE 5,02,618 5,18,716 60.03 3.20 NSE 10,99,534 11,40,071 77.92 3.68 Dérivative Segment 21,43,101 25,63,165 384.50 19.60 BSE 12,452 16,112 402.50 29.39 NSE 21,30,649 25,47,053 384.40 19.54
D. Market Capitalisation (Rs. cr.) @ BSE 12,01,207 16,98,428 109.92 41.39 NSE 11,20,976 15,85,585 108.70 41.44
E. P/E Ratio @ BSE Sensex 18.57 15.90 – – S&P CNX Nifty 20.70 14.80 – – S&P CNX 500 17.12 14.20 – –
* Volatility is measured in terms of standard deviation of returns on index. @ As on March 31 of the respective year. foreign institutional investors (FIIs) and sector- the US interest rates. Trends in international specific developments contributed to the markets as well as domestic inflation rate also sustained rally in the stock market. However, adversely affected the market sentiment. intermittent profit booking was observed In consonance with buoyancy in the particularly towards the end of 2004-05, stock market, the turnover as well as market mostly influenced by acceleration in the capitalisation rose significantly. Increase in international prices of crude oil and rise in turnover was more pronounced in case of
36 Part Two: Review of Trends and Operations
derivatives. The BSE market capitalisation as market was highly turbulent in May 2004 a percentage to GDP rose from 43.5 per cent mainly due to politically uncertainty (Table at the end of March 2004 to 54.6 per cent at 2.8). On May 17, 2004, the BSE Sensex the end of March 2005. Despite sharp crashed by 564 points or 11.13 per cent over increase in share prices, the price-earning its previous close. The intra-day fall on that (P/E) ratio declined modestly which can be day was as high as 842 points, the highest partly attributed to improved profitability by the in the history of BSE. The nation-wide circuit corporate sector. With effect from December breaker was triggered suspending trading 20, 2004, the P/E ratio of BSE has been twice on the day. The subdued conditions in computed on the basis of four-quarter moving the international market also weakened the average of profitability of the company instead market sentiment further. SEBI responded of year-end (balance sheet) profit used earlier. quickly to contain volatility and impart orderly This is in conformity with the international best condition to the capital market. Despite severe practices. At the current level of P/E ratio, setback to the market, there was no payment the Indian stocks appear to be attractive, default. As the fundamentals were strong, although India’s P/E ratio was one of the stock markets recovered quickly and normalcy highest in the emerging markets. The volatility was restored within a short period. The measured in terms of annualised standard recovery in the stock market was sustained deviation was modestly higher in 2004-05 except for periodic consolidation. The monthly than that in the previous year. returns were positive consecutively for the The movement of major stock indices next seven months. The benchmark stock and the monthly returns indicate that stock indices closed at a historic high on March 8,
Table 2.8: Major Stock Indices and their Returns
Percent- BSE Percent- S&P Percent- CNX Percent- S&P Percent- Year/ BSE age 100 age CNX age Mid age CNX age Month Sensex Variation Index Variation Nifty Variation Cap Variation 500 Variation 1 2 3 4567891011 2003-04 5591 83.37 2966 97.60 1772 81.18 1603 140.32 1458 107.98 2004-05 6493 16.13 3482 17.39 2036 14.88 2782 73.54 1773 21.60 Apr. 04 5655 1.10 3025 2.00 1796 1.40 1739 4.90 1508 3.40 May 04 4760 -15.83 2525 -16.53 1484 -17.37 1506 -13.40 1227 -18.63 Jun. 04 4795 0.74 2561 1.43 1506 1.48 1524 1.20 1248 1.71 Jul. 04 5170 7.82 2755 7.58 1632 8.37 1698 11.42 1351 8.25 Aug. 04 5192 0.43 2789 1.23 1632 0.00 1864 9.78 1377 1.92 Sep. 04 5584 7.55 2998 7.49 1746 6.99 1993 6.92 1479 7.41 Oct. 04 5672 1.58 3028 1.00 1787 2.35 2017 1.20 1502 1.56 Nov. 04 6234 9.91 3340 10.30 1959 9.63 2272 12.64 1653 10.05 Dec. 04 6603 5.92 3580 7.19 2081 6.23 2595 14.22 1805 9.20 Jan. 05 6556 -0.71 3522 -1.62 2058 -1.11 2609 0.54 1768 -2.05 Feb. 05 6714 2.41 3612 2.56 2103 2.19 2758 5.71 1827 3.34 Mar. 05 6493 -3.29 3482 -3.60 2036 -3.19 2782 0.87 1773 -2.96
Note: Indices relate to closing values as on the last trading day of the respective year/month. Source: NSE, BSE.
37 Annual Report 2004-05
2005. The BSE Sensex was close to 7000 economic growth. The services sector has mark in the intra-day trade on March 9, 2005. been leading the overall GDP growth during Market was volatile during the last quarter of the post-liberalisation period. If stock markets the year mainly due to year-end consideration, are to reflect the economic fundamentals in rise in international crude oil prices and the long-run, returns generated by sectoral apprehension about acceleration in the stock indices should trace the growth rates interest rates in the developed countries, of the respective sectors. The S&P CNX IT particularly in the US. index grew by 50.9 per cent on a point-to- point basis in 2004-05, much higher than that The movement of the major international of 29.4 per cent in 2003-04 (Table 2.9). This indices (normalised to 100 as on March 31, is corroborated by 8.6 per cent growth 2004) indicate that BSE Sensex outperformed recorded by services sector during the same most of the indices such as Dow Jones period. The BSE capital goods index gained Industrial of USA, the DJ Stoxx of Europe by 39.9 per cent in 2004-05 on top of 147.2 and Shanghai Composite of China (Chart per cent in the previous year. Performance 2.4). The volatility as measured by standard of PSU and FMCG was lower than that of deviation was higher in India than that in BSE Sensex (Chart 2.5). major international markets. The Indian stock markets witnessed high volatility due to Monthly returns of sectoral indices exceptional events. present a mixed picture. The highest gain in sectoral indices (on a 1-month horizon) was II. Performance of Sectoral Indices noticed in case of CNX Bank (21.5 per cent Different sectors of the economy grew in November 2004). The losses were at varied pace. Depending upon the macro maximum in CNX PSE, CNX Bank, and BSE economic policies and the current business capital goods in the month of May 2004. The environment, certain sectors led the real banking sector was among the top gainers
38 Part Two: Review of Trends and Operations
Table 2.9: Sectoral Stock Indices and Returns
Percent- Percent- Percent- Percent- BSE Percent- Year/ CNX CNX BSE CNX IT age age age age Capital age Month VariationBank VariationPSE VariationFMCG Variation Goods Variation 1 2 34567891011 2003-04 1937 29.39 2814 NA 1684 147.65 944 31.29 2282 147.24 2004-05 2923 50.90 3537 25.69 1726 2.49 1053 11.55 3192 39.88 Apr. 04 2069 4.30 3060 6.40 1706 -0.30 935 -2.90 2335 -1.20 May 04 2042 -1.30 2244 -26.67 1219 -28.55 844 -9.73 1841 -21.16 Jun. 04 2115 3.57 2256 0.53 1282 5.17 825 -2.25 1997 8.47 Jul. 04 2269 7.28 2332 3.37 1433 11.78 847 2.67 2189 9.61 Aug. 04 2340 3.13 2345 0.56 1439 0.42 849 0.24 2342 6.99 Sep. 04 2496 6.67 2506 6.87 1541 7.09 921 8.48 2441 4.23 Oct. 04 2667 6.85 2467 -1.56 1588 3.05 898 -2.50 2485 1.80 Nov. 04 2997 12.37 2998 21.52 1671 5.23 1039 15.70 2681 7.89 Dec. 04 2937 -2.00 3497 16.64 1815 8.62 1059 1.92 3001 11.94 Jan. 05 2849 -3.00 3430 -1.92 1735 -4.41 1122 5.95 2985 -0.53 Feb. 05 2919 2.46 3676 7.17 1804 3.98 1065 -5.08 3372 12.96 Mar. 05 2923 0.14 3537 -3.78 1726 -4.32 1053 -1.13 3192 -5.34
Note: Indices relate to closing values as on the last trading day of the respective year/month. Source: NSE, BSE. as well as losers, exhibiting a highly volatile cent, respectively. This stands in contrast to behaviour throughout the year. Returns in the yearly returns of 73 per cent and 50 per CNX Mid-cap and CNX IT have recorded cent posted by these indices. Although short monthly highs of 13.0 per cent and 12.4 per term volatile gains were observed in different
39 Annual Report 2004-05
sectors, CNX Mid-cap and CNX IT have 3.7 per cent, respectively in 2004-05 on top amply rewarded the medium term investors of 60.0 per cent and 77.9 per cent in the with a 1-year horizon. previous year (Table 2.11). Month-wise, the BSE recorded the highest turnover in March III. Turnover in the Indian Stock 2005 (Rs. 59,528 crore) followed by Market December 2004 (Rs.50,226 crore) while the The total turnover in all stock exchanges NSE recorded the highest turnover in rose modestly by 2.86 per cent in 2004-05 December 2004 (Rs. 1,15,593 crore) followed as compared with 67.25 per cent in the by March 2005 (Rs.1,13,055 crore). In previous year (Table 2.10). The NSE and BSE percentage term, the highest increase in combine accounted for more than 99 per cent turnover over the previous month was of the total turnover in 2004-05.The turnover observed in December 2004 in case of both at BSE and NSE rose by 3.2 per cent and the major exchanges.
Table 2.10: Turnover in the Stock Exchanges in India (Rs.crore)
Stock Exchange 2003-04 2004-05 Percentage Share
1 234
Ahmedabad 4,544 8 0.001 BSE 5,02,618 5,18,716 31.1 Bangalore 0 Nil Nil Bhubaneswar 0 Nil Nil Calcutta 1,928 2,715 0.2 Cochin 0 Nil Nil Coimbatore 0 Nil Nil Delhi 3 Nil Nil Gauhati 0 Nil Nil Hyderabad 2 14 0.001 ISE 0 Nil Nil Jaipur 0 Nil Nil Ludhiana 0 Nil Nil Madras 101 27 0.002 Magadh 0 Nil Nil Mangalore 0 0 Nil MPSE 0 Nil Nil NSE 10,99,534 11,40,072 68.4 OTCEI 16 0.01 0.0 Pune 0 0.3 0.0 SKSE 0 0 0.0 UPSE 11,751 5,343 0.3 Vadodara 0 Nil Nil Total 16,20,497 16,66,896 100.0
Source: Various Stock Exchanges.
40 Part Two: Review of Trends and Operations
Table 2.11: Turnover in BSE and NSE (Rs. crore) BSE NSE Total Year / Month Percentage Percentage Turnover Turnover Turnover Variation Variation
123 4 56
2003-04 5,02,618 60.03 10,99,534 77.92 16,02,152 2004-05 5,18,717 3.20 11,40,071 3.68 16,58,788 April 44,864 -11.66 1,00,951 -3.75 1,45,815 May 45,938 2.39 98,920 -2.01 1,44,858 June 36,990 -19.48 84,898 -14.18 1,21,888 July 39,449 6.65 93,836 10.53 1,33,285 August 38,195 -3.18 86,856 -7.44 1,25,051 September 39,603 3.69 88,508 1.90 1,28,111 October 34,608 -12.61 75,698 -14.47 1,10,306 November 35,742 3.28 82,035 8.37 1,17,777 December 50,226 40.52 1,15,593 40.91 1,65,819 January 43,888 -12.62 99,732 -13.72 1,43,620 February 49,686 13.21 99,989 0.26 1,49,675 March 59,528 19.81 1,13,055 13.07 1,72,583
Source: NSE, BSE.
City-wise Turnover IV. Market Capitalisation Widening the geographical reach of The market capitalisation indicates the capital markets is one of the avowed size of capital market. Moreover, it acts as objectives of development of securities an indicator of the amount of notional wealth markets in India. Besides the regulation generated, though all of it cannot be realised. aspect of securities market, development of The market capitalisation increased by more market infrastructure and automated systems than 41 per cent by the end of 2004-05 for has been high on the agenda of the both BSE and NSE over the previous year regulatory agency. It is believed that securities (Tables 2.13 and 2.14). In absolute terms, market can generate a nation-wide interest market capitalisation at BSE was higher at on the pillars of a transparent and efficient Rs. 16,98,428 crore than that of NSE at Rs. securities market. On-line trading facilities, 15,85,585 crore on March 31, 2005. A higher dematerialised securities and electronic IPO market capitalisation implies the larger application system are a few of the features number of active scrips at BSE during 2004- that catalyse the penetration of stock 05. Market capitalisation of the shares investment culture into the farthest corners included in S&P CNX Nifty rose by a higher of a diverse nation like India. The financial margin of 49 per cent during the financial year hub at Mumbai accounted for 56 per cent of as compared with 41 per cent increase in the stock turnover, while Delhi region accounted total market capitalisation of NSE. Hence, the for 11 per cent of business during 2004-05. valuation of Nifty scrips has risen faster as Among the other metropolitan cities, Kolkata compared to the whole of NSE. The market accounted for 9 per cent, but Chennai shared capitalisation in BSE Teck recorded an a meagre 2 per cent (Table 2.12). impressive increase of 94.7 per cent in
41 Annual Report 2004-05
Table 2.12: City-wise Turnover of Top 10 Cities in Cash Segment: BSE and NSE Combined (Rs. crore) 2003-04 2004-05 Percentage Percentage City Turnover Share in City Turnover Share in All-India All-India Turnover Turnover 123456 Mumbai / Thane 8,59,600 53 Mumbai / Thane 9,33,119 56 Delhi/Ghaziabad 1,93,244 12 Delhi/Ghaziabad 1,85,994 11 Kolkata / Howrah 1,50,113 9 Kolkata / Howrah 1,46,939 9 Ahmedabad 49,680 3 Ahmedabad 49,257 3 Chennai 33,231 2 Chennai 34,916 2 Hyderabad/ Hyderabad/ Secunderabad/ Secunderabad/ Kukatpally 26,520 2 Kukatpally 25,667 2 Bangalore 22,867 1 Bangalore 22,864 1 Jaipur 18,753 1 Jaipur 17,168 1 Indore 13,471 1 Indore 13,611 1 Pune 13,047 1 Baroda 12,652 1
Source: NSE, BSE.
2004-05 on top of 63.5 per cent in the of Bangalore Stock Exchange recorded a rise previous year. In NSE, the IT sector of 48 per cent. The number of total brokers witnessed still higher increase in market declined in most of the stock exchanges capitalisation (120.2 per cent). except Bangalore, BSE, Delhi, Inter- connected Stock Exchange, Magadh and V. Activities in Regional Stock NSE where there were marginal increase. Exchanges Barring NSE and BSE, active brokers were much less than the total brokers (Table 2.16). All the 22 stock exchanges in India are geographically widespread. However, other While the all-India turnover increased by than NSE, BSE, Ahmedabad, Calcutta and 3 per cent, the number of shares traded UPSE, the remaining exchanges had increased by 14 per cent in 2004-05. Again negligible or nil turnover. During 2004-05, the quantity of shares delivered increased by a total turnover at regional exchanges increased substantial 23 per cent and the value of total by 4 per cent over the previous financial year. delivered shares increased by 19 per cent. Many brokers of regional exchanges trade on Thus lower value shares have traded with the terminals of NSE and/or BSE through their higher frequency as compared to the previous regional subsidiary. The trading details of financial year. subsidiaries of regional exchanges are provided in Tables 2.15 to 2.17. Trading on subsidiaries has recorded a substantial jump VI. Trading Frequency in the case of a few regional exchanges. The fulfillment of listing requirements Subsidiary of Delhi Stock Exchange witnessed does not ensure liquidity of scrips unless a rise in turnover by 113 per cent while that frequently traded in the stock exchanges.
42 Part Two: Review of Trends and Operations
Table 2.13: Market Capitalisation at BSE (Rs. crore) All Percent- Percent- BSE- Percent- Percent- Percent- Year/ listed age BSE age TECK age BANKEX age BSEPSU age Month companies VariationSensex Variation Index VariationIndex VariationIndex Variation 1 2 34 567 8 91011 2003-04 12,01,207 109.92 6,25,173 148.93 1,45,053 63.47 1,13,094 151.09 4,11,532 158.75 2004-05 16,98,428 41.39 7,25,553 16.06 2,82,425 94.70 1,54,048 36.21 5,16,365 25.47 Apr. 04 12,55,347 4.51 6,33,834 1.39 1,54,586 6.57 1,22,133 7.99 4,25,107 3.29 May 04 10,23,129 -18.50 5,29,384 -16.48 1,44,999 -6.20 91,851 -24.79 3,04,933 -28.27 Jun. 04 10,47,258 2.36 5,35,262 1.11 1,50,479 3.78 93,195 1.46 3,15,156 3.35 Jul. 04 11,35,589 8.43 5,78,250 8.03 1,65,106 9.72 95,846 2.84 3,47,646 10.31 Aug. 04 12,16,566 7.13 5,79,970 0.30 1,66,448 0.81 95,888 0.04 3,49,381 0.50 Sep. 04 13,09,318 7.62 6,21,289 7.12 1,81,351 8.95 1,02,697 7.10 3,75,079 7.36 Oct. 04 13,37,191 2.13 6,37,506 2.61 1,92,021 5.88 1,01,581 -1.09 3,79,468 1.17 Nov. 04 15,39,595 15.14 6,93,960 8.86 2,16,159 12.57 1,23,763 21.84 4,13,141 8.87 Dec. 04 16,85,988 9.51 7,35,528 5.99 2,86,294 32.45 1,44,529 16.78 5,34,650 29.41 Jan. 05 16,61,532 -1.45 7,31,785 -0.51 2,81,455 -1.69 1,44,731 0.14 5,13,525 -3.95 Feb. 05 17,30,940 4.18 7,47,866 2.20 2,88,054 2.34 1,55,303 7.30 5,38,601 4.88 Mar. 05 16,98,428 -1.88 7,25,553 -2.98 2,82,425 -1.95 1,54,048 -0.81 5,16,365 -4.13
Source: BSE.
Table 2.14: Market Capitalisation at NSE (Rs. crore) All Per- Per- Per- Per- Per- Per- Year/ listed centage S&P centage CNX centage CNX centage CNX centage S&P centage CNX Mid CNX Month com- Varia- Varia- Varia- IT Varia- Bank Varia- Varia- panies tionNifty tionCap tion tion tionPharma tion 123 4 5 6 7 8 9 10 11 12 13 2003-04 11,20,976 108.69 6,38,599 NA 81,280 -1.32 1,03,168 39.52 1,01,928 NA 68,831 83.69 2004-05 15,85,585 41.44 9,51,672 49.02 1,48,019 82.11 2,27,191 120.21 1,36,921 34.33 93,126 35.30 Apr. 04 11,71,828 4.53 7,71,153 20.57 88,625 9.04 1,08,155 4.83 1,13,816 11.66 75,813 10.14 May 04 9,50,494 -18.89 6,32,652 -17.96 76,742 -13.41 1,06,787 -1.26 83,650 -26.50 69,219 -8.70 Jun. 04 9,79,700 3.07 6,42,325 1.53 77,912 1.52 1,11,064 4.01 84,118 0.56 65,074 -5.99 Jul. 04 10,66,087 8.82 6,98,209 8.70 86,617 11.17 1,19,934 7.99 86,980 3.40 67,943 4.41 Aug. 04 11,43,075 7.22 6,98,427 0.03 96,473 11.38 1,23,695 3.14 87,468 0.56 69,909 2.89 Sep. 04 12,27,550 7.39 7,47,280 6.99 1,03,303 7.08 1,32,096 6.79 93,465 6.86 79,971 14.39 Oct. 04 12,53,825 2.14 7,65,067 2.38 1,04,862 1.51 1,44,522 9.41 92,038 -1.53 79,177 -0.99 Nov. 04 14,46,292 15.35 8,39,857 9.77 1,18,528 13.03 1,62,594 12.50 1,11,850 21.53 84,850 7.16 Dec. 04 15,79,161 9.19 9,02,831 18.01 1,36,202 14.91 1,59,453 -1.93 1,30,849 16.99 1,09,712 29.30 Jan. 05 15,57,444 -1.38 8,93,674 -1.01 1,38,413 1.62 1,55,455 -2.51 1,28,324 -1.93 98,700 -10.04 Feb. 05 16,14,597 3.67 9,78,440 9.49 1,45,942 5.44 2,26,700 45.83 1,37,593 7.22 95,572 -3.17 Mar. 05 15,85,585 -1.80 9,51,672 -2.74 1,48,019 1.42 2,27,191 0.22 1,36,921 -0.49 93,126 -2.56
Source: NSE.
43 Annual Report 2004-05
Table 2.15: Trading Statistics of Stock Exchanges Shares Traded Shares Delivered Value of Shares Stock Exchanges (Lakh) (Lakh) Delivered (Rs. crore) 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 1 2 3 4 567 Ahmedabad 2,514 4 115 0.05 0.00 0.25 (0.23) (0.00) (0.04) (0.00) BSE 3,88,748 4,77,174 1,44,531 1,89,077 1,29,311.90 1,40,055.90 (34.84) (37.55) (45.09) (48.13) (36.95) (33.54) Bangalore 3 Nil 3.18 Nil 0.53 Nil (0.00) (0.00) (0.00) Bhubaneswar 0.00 Nil 0.00 Nil 0.00 Nil Calcutta 4,378 3,381 1,225 1,383 265.84 1,262.00 (0.39) (0.27) (0.38) (0.35) (0.08) (0.30) Cochin 0.00 Nil 0.00 Nil 0.00 Nil Coimbatore 0.00 Nil 0.00 Nil 0.00 Nil Delhi 0.03 Nil 0.03 Nil 0.14 Nil (0.00) (0.00) (0.00) Gauhati 0.00 Nil 0.00 Nil 0.00 Nil Hyderabad 17 45 11 37 1.86 9.10 (0.00) (0.00) (0.01) (0.01) (0.00) (0.00) ISE 0.06 Nil 0.04 Nil 0.03 Nil (0.00) (0.00) (0.00) Jaipur 0.00 Nil 0.00 Nil 0.00 Nil Ludhiana 0.00 Nil 0.00 Nil 0.00 Nil Madras 85 14 1 14 0.19 27.33 (0.01) (0.00) (0.00) (0.00) (0.00) (0.00) Magadh 0.19 Nil 0.00 Nil 0.00 Nil (0.00) Mangalore 0.00 Nil 0.00 Nil 0.00 Nil MPSE 0.00 Nil 0.00 Nil 0.00 Nil NSE 7,13,301 7,87,996 1,74,538 2,02,277 2,20,340.70 2,76,120.00 (63.93) (62.02) (55.46) (51.49) (62.95) (66.14) OTCEI 22 1 0.00 0.00 0.00 0.00 (0.00) (0.00) Pune 0.00 2 Nil 0.00 Nil 0.00 (0.00) SKSE 0.00 0 Nil 0 Nil 0 UPSE 6,737.00 1,917 74 28 76.00 28.0 (0.60) (0.15) (0.02) (0.01) (0.02) (0.01) Vadodara Nil Nil Nil Nil Nil Nil
Total 11,15,807 12,70,535 3,20,504 3,92,817 3,49,997 4,17,501.58
Note: Figures in parentheses indicate percentage to total. Source: Various Stock Exchanges.
44 Part Two: Review of Trends and Operations
Table 2.16: Status of Brokers with Stock Exchanges
Number of Active Active Brokers as Total Brokers Stock Exchange Brokers* Percentage to Total 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 1 23456 7 Ahmedabad 323 317 24 10 7.43 3.15 Bangalore 242 250 5 0 2.07 0.00 BSE 673 726 516 560 76.67 77.13 Bhubaneswar 229 221 0 8 0.00 3.62 Calcutta 980 962 268 152 27.35 15.80 Cochin 468 446 0 80 0.00 17.94 Coimbatore 177 135 0 0 0.00 0.00 Delhi 373 376 0 0 0.00 0.00 Gauhati 172 119 10 12 5.81 10.08 Hyderabad 305 288 55 42 18.03 14.58 ISE 633 654 4 0 0.63 0.00 Jaipur 532 522 0 0 0.00 0.00 Ludhiana 297 293 0 90 0.00 30.72 MPSE 179 174 0 0 0.00 0.00 Madras 182 178 12 9 6.59 5.06 Magadh 195 198 0 0 0.00 0.00 Mangalore 105 66 0 0 0.00 0.00 NSE 970 976 805 822 82.99 84.22 OTCEI 867 801 113 111 13.03 13.86 Pune 197 186 0 1 0.00 0.54 SKSE 437 425 0 0 0.00 0.00 UPSE 514 504 177 177 34.44 35.12 Vadodara 318 311 3 0 0.94 0.00
* Figures received from various stock exchanges.
Therefore, frequency of trading assumes year. The number of shares traded on BSE significance as an indicator of liquidity. As for more than 100 days rose from 1,960 in indicated earlier, although India has 22 stock 2003-04 to 2,368 in 2004-05. Similarly, the exchanges, BSE and NSE together account number of shares traded on NSE for more for more than 99 per cent of the total turnover. than 100 days increased from 741 to 818 Therefore, trading frequency of listed scrips during the same period. The actively traded is analysed in respect of BSE and NSE. The shares above 100 days as percentage to total trading frequency improved in 2004-05 over traded shares also rose considerably in both that of the previous year (Table 2.18). The the exchanges. Another positive development number of shares traded on BSE and NSE was that the percentage of stocks that are were higher at 2,906 and 856, respectively traded for 30 days or less, declined in 2004- than those of 2,610 and 804 in the previous 05 over the previous year.
45 Annual Report 2004-05
Table 2.17: Trading Details of Subsidiaries of Stock Exchanges (Rs. crore) Turnover of Stock No. of Percentage Name of the Subsidiary Each Subsidiary Exchange Subsidary/ies Variation 2003-04 2004-05 12 3 456 Ahmedabad 2 ACML – BSE Operations 1,836 19,639 ACML – NSE Operations 17,196 1,013 Total 19,031 20,652 8.52 BSE Nil Nil Nil Nil Nil Bangalore 1 BgSE Financials Ltd. 14,640 21,798 48.80 Bhubaneswar Bhubaneswar Shares and Nil Nil Nil Securities Ltd. Calcutta Nil Nil Nil Nil Nil Cochin 1 Cochin Stock Brokers. Ltd. 4,062 3,795 -6.60 Coimbatore 1 CSX Securities Ltd. Nil Nil Nil Delhi 1 DSE Financial Services Ltd. 380 841 113.20 Gauhati Nil Nil Nil Nil Nil Hyderabad 1 HSE Securities Ltd. (HSES) of which, At NSE (Cash) 5,660 4,842 At NSE (F&O) 3,122 3,544 At BSE (Cash) 354 395 Total 9,137 8,781 3.90 ICSE 1 ISE Securities and Services Ltd. of which NSE (Cash) 22,603 21,771 NSE (F & O) 11,369 11,347 BSE (Equities) – 59 Total 33,972 33,178 -2.30 Jaipur 1 JSEL Securities Ltd. 6,817 5,953 -12.70 Ludhiana 1 LSE Securities Limited 36,961 37,224 0.70 Madras 1 MSE Financial Services Ltd. 843 1,101 30.40 Magadh 1 MSEA Securities Ltd. Nil Nil Nil Mangalore Nil Nil Nil Nil Nil MPSE 1 MPSE Securities Ltd. 2,865 3,166 10.50 NSE Nil Nil Nil Nil Nil OTCEI 1 OTCEI Securities Ltd. 2,070 1,645 -20.60 Pune 1 PSE Securities Ltd. 8,550 7,150 -16.40 SKSE 1 SKSE Securities Ltd. 14,118 13,852 -2.00 UPSE 1 UPSE Securities Ltd. 2,323 2,474 6.50 Vadodara 1 VSE Stock Services Ltd. 8,251 9,074 9.90 Subsidiaries’ Total 1,64,019 1,70,683 4.00 Subsidiaries’ Total as percentage of Gross 10.12 10.23 Total for All Exchanges
Source: Various Stock Exchanges.
46 Part Two: Review of Trends and Operations
Table 2.18: Trading Frequency of Listed Stocks
Trading 2003-04 2004-05 Fre- BSE NSE BSE NSE quency No. of No. of No. of No. of (Range Com- Percentage Com- Percentage Com- Percentage Com- Percentage of panies of panies of panies of panies of Days) Traded Total Traded Total Traded Total Traded Total 123 4 5 6789 Above 1,960 75.10 741 92.16 2,368 81.49 818 95.56 100 91-100 65 2.49 7 0.87 36 1.24 2 0.23 81-90 54 2.07 8 1.00 37 1.27 1 0.12 71-80 49 1.88 3 0.37 35 1.20 4 0.47 61-70 46 1.76 2 0.25 32 1.10 6 0.70 51-60 58 2.22 11 1.37 50 1.72 3 0.35 41-50 61 2.34 8 1.00 34 1.17 1 0.12 31-40 56 2.15 2 0.25 41 1.41 4 0.47 21-30 52 1.99 7 0.87 68 2.34 4 0.47 11-20 63 2.41 8 1.00 63 2.17 3 0.35 1-10 146 5.59 7 0.87 142 4.89 10 1.17 Total 2,610 100.00 804 100.00 2,906 100.00 856 100.00
Source: NSE, BSE.
VII. Capital Market Indicators cent in 2004-05 (Table 2.19). Similarly, the The ratios such as market capitalisation traded value ratio in the cash segment went to GDP (m-cap ratio), traded value to GDP up from 39.3 per cent in 2002-03 to 58.7 per (traded value ratio) and price to earning per cent in 2003-04, before slightly declining to share (P/E ratio) are monitored to gauge the 53.6 per cent in 2004-05. However, the extent of development of stock market. The turnover in derivative segment as percentage m-cap ratio, which was 23.2 per cent in 2002- to GDP rose persistently from 17.9 per cent 03, more than doubled to 43.5 per cent in in 2002-03 to 77.6 per cent in 2003-04 and 2003-04 and further increased to 54.6 per further to 82.5 per cent in 2004-05.
Table 2.19: Select Ratios Relating to Capital Market (Per cent) Turnover to GDP BSE Market Year at Current Market Prices Capitalisation to GDP Cash Segment Derivative Segment 1234 2002-03 23.23 39.33 17.95 2003-04 43.52 58.71 77.64 2004-05 54.64 53.62 82.46
Sources: 1. Central Statistical Organisation. 2. Various Stock Exchanges.
47 Annual Report 2004-05
During the upswing of a business cycle, to benchmark indices also declined in India P/E ratio has a general tendency to fall. (Table 2.20). This is an indication that market Following global recovery, the P/E ratio, in has the potential to grow further. However, fact, declined in most of the countries despite the P/E ratios relating to major sectoral higher security prices (Chart 2.6). Similar to indices such as Mid-cap, IT were higher than the international trend, the P/E ratio relating those in the previous year.
Table 2.20: Price-Earnings Ratio Year/ BSE BSE S&P CNX CNX CNX CNX Month Sensex 100 Index CNX Nifty Mid Cap IT Bank PSE 12345678 2003-04 18.57 16.11 20.70 17.15 28.77 9.84 12.37 2004-05 15.61 13.30 14.60 21.93 51.14 10.79 10.57 Apr. 04 18.83 16.58 18.68 18.74 30.81 10.99 12.53 May 04 15.49 13.37 11.94 16.23 30.42 8.08 8.96 Jun. 04 14.23 12.23 12.64 18.92 28.83 7.36 9.40 July 04 15.38 13.06 13.63 20.97 31.14 7.61 10.52 Aug. 04 15.42 13.21 13.64 16.62 29.53 6.90 10.43 Sep. 04 16.74 13.98 14.59 15.02 30.65 7.37 10.83 Oct. 04 17.26 13.91 14.93 15.45 32.48 7.26 9.63 Nov. 04 18.79 15.21 16.39 17.46 36.55 8.82 10.13 Dec. 04 17.07 14.28 15.32 19.82 35.56 10.32 10.89 Jan. 05 16.33 13.70 14.68 20.14 34.67 10.12 10.63 Feb. 05 16.09 13.79 15.02 21.63 51.03 10.85 11.05 Mar. 05 15.61 13.30 14.60 21.93 51.14 10.79 10.57
Source: NSE, BSE.
48 Part Two: Review of Trends and Operations
Month-wise, the P/E ratio shows that price of an asset. Conventionally, it can be CNX IT index witnessed consistently higher measured in terms of variance, standard P/E ratio above 30 with the highest (51.14) deviation or coefficient of variation. Several by end-March 2005. As compared to the IT sophisticated econometric techniques could index, the CNX Bank had low P/E ratio at also be applied to measure volatility. For approximately 10 with highest of 11.0 at end- simplicity, conventionally used measure of April 2004. volatility such as standard deviation is relied upon. For most of the months during 2004- The P/B ratio is an indicator of the 05, volatility in both the indices was less than returns left for shareholders after providing for one (Table 2.22). The highest monthly liabilities of a company. Thus, the P/B ratio volatility was recorded during May 2004 at indicates the asset quality of companies 3.8 per cent for the BSE Sensex and 4.2 per pertaining to that sector. The CNX IT index cent for S&P CNX Nifty. The May 2004 recorded the highest P/B ratio of 11.3 at the volatility captures the 842 points intra-day end of February and March 2005. The lowest slide in Sensex on May 17, 2004 when an 8 P/B ratio was noticed in CNX Bank index sigma deviation was observed in Value-at- hovering around 2 (Table 2.21). A combination Risk. The risk management systems, that of rising P/B ratio and falling P/E ratio in a were put in place, were used to contain buoyant market condition offers tremendous volatility. As a result, payment defaults and scope for investment. other anomalies did not occur out of market shock. During the last quarter of 2004-05, VIII. Volatility in Stock Markets January saw the highest volatility of 1.5 per Volatility measures the variability of the cent in Sensex and 1.7 per cent in Nifty index.
Table 2.21: Price to Book-Value Ratio
Year/ BSE BSE S&P CNX CNX CNX CNX Month Sensex 100 Index CNX Nifty Mid Cap IT Bank PSE 12345678 2003-04 3.50 3.09 3.50 1.49 5.70 2.07 2.87 2004-05 3.72 3.23 3.82 2.40 11.28 2.31 2.55 Apr. 04 3.55 3.16 3.54 1.61 6.07 2.31 2.91 May 04 2.91 2.54 2.84 1.40 5.99 1.70 2.08 June 04 2.67 2.37 2.83 1.42 5.87 1.59 2.18 July 04 2.88 2.55 2.95 1.58 6.50 1.65 2.44 Aug. 04 2.89 2.58 2.94 1.64 6.71 1.47 2.44 Sept. 04 3.20 2.81 3.16 1.70 6.84 1.58 2.58 Oct. 04 3.29 2.83 3.08 1.71 7.15 1.55 2.30 Nov. 04 3.58 3.09 3.38 1.93 8.05 1.89 2.42 Dec. 04 3.77 3.33 3.61 2.21 7.86 2.21 2.62 Jan. 05 3.75 3.26 3.57 2.25 7.67 2.16 2.56 Feb. 05 3.83 3.35 3.92 2.36 11.26 2.32 2.66 Mar. 05 3.72 3.23 3.82 2.40 11.28 2.31 2.55
Note: CNX Bank Index was launched w.e.f. September 15, 2003. Source: NSE, BSE.
49 Annual Report 2004-05
Table 2.22: Daily Volatility of Benchmark Indices (Per cent)
2004-05 BSE Sensex S&P CNX Nifty
123
April 1.3 1.1 May 3.8 4.2 June 1.3 1.5 July 1.0 1.3 August 0.9 1.0 September 0.7 0.8 October 0.9 1.0 November 0.7 0.7 December 0.8 0.7 January 1.5 1.7 February 0.8 0.8 March 1.0 1.1
Note: Volatility is measured in terms of standard deviation and is computed from the returns based on closing values of Indices.
Volatility of International Indices: A comparative picture of annual returns A Comparison on indices vis-à-vis the annualised volatility Global investors explore emerging is examined (Table 2.24). It is evident from markets in search of higher returns and also Table 2.24 that among developed markets, to reduce risk through portfolio diversification. with a low volatility of 6.8 per cent, Australia However, cross border flows entail a possible posted a healthy return of 20 per cent. contagion in the event of a financial However, Hong Kong with a volatility of 15.1 turbulence. Hence, at times, volatility of per cent could provide only a 6.6 per cent international markets moves in sync with each index return on a year-on-year basis. In other. The developed markets, in general, had emerging markets, index returns trace the less annualised volatility during 2004-05 volatile pattern with China SHCOMP index compared to the volatility exhibited by the sliding by 32.2 per cent with an annualised emerging market economies (Chart 2.7). The volatility of 20.4 per cent. In case of India, highest volatility among developed markets both Sensex and Nifty posted positive returns was observed in Nasdaq (15.7 per cent) of 16.1 and 14.9 per cent, respectively with followed by Hang Seng Index (15.1 per cent) annualised volatility of 23.8 and 26.1 per cent, and the lowest volatility was in AS30 Index respectively. The correlation coefficient of Australia (6.8 per cent). Among the between volatility and annualised return from emerging economies, Russia witnessed the a sample of 19 countries worked out to be highest annualised volatility of 36.4 per cent negative (-0.43). A high level of return from while Malaysia had the lowest volatility of 10.2 stock market may be possible with low level per cent (Table 2.23). of volatility.
50 Part Two: Review of Trends and Operations
Table 2.23: Trends in Daily and Annualised Volatility of International Stock Indices (2004-05) (Per cent) Ann- uali- Country Index Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. sed Vol- atility 123456789101112131415
DEVELOPED MARKETS
USA DJIA 0.7 0.7 0.5 0.5 0.8 0.6 0.7 0.6 0.6 0.6 0.7 0.6 10.3
USA Nasdaq
Composite 1.3 1.0 1.0 1.2 1.3 0.9 1.1 0.7 0.7 1.0 0.8 0.7 15.7
UK Footsie 0.6 0.9 0.5 0.7 0.7 0.5 0.7 0.6 0.4 0.5 0.5 0.4 9.5
Europe DJ Stoxx 0.9 1.2 0.7 0.8 0.9 0.7 1.0 0.6 0.6 0.6 0.6 0.6 12.6
France CAC 0.9 1.2 0.8 0.8 0.9 0.7 1.0 0.6 0.6 0.6 0.6 0.6 12.8
Germany DAX 1.0 1.4 0.9 1.0 1.0 0.7 1.1 0.6 0.6 0.6 0.6 0.6 14.3
Australia AS 30 0.4 0.5 0.4 0.4 0.4 0.3 0.5 0.4 0.4 0.4 0.4 0.5 6.8
Hong Kong HSI 1.0 1.6 1.3 0.8 0.8 0.8 0.9 0.8 0.7 0.8 0.6 0.7 15.1
Singapore STI 0.8 1.4 0.6 0.6 0.7 0.5 0.8 0.5 0.7 0.5 0.5 0.6 11.5
EMERGING MARKETS
Taiwan TWSE 1.5 2.5 1.8 1.1 1.0 0.8 0.9 1.1 0.5 0.8 0.5 0.6 20.9
Russia CRTX 2.2 2.8 3.8 3.0 1.8 0.7 2.4 1.5 2.8 1.4 1.0 1.6 36.4
Malaysia KLCI
(Comp) 0.7 1.1 0.7 0.6 0.5 0.6 0.5 0.7 0.5 0.5 0.4 0.5 10.2
Thailand SET 1.8 2.4 0.9 1.0 1.1 1.0 1.7 0.9 0.8 0.8 0.7 1.0 20.3
China Shanghai A 0.9 1.2 1.3 1.3 1.1 2.0 1.3 1.2 0.9 1.2 1.4 1.0 20.4
S. Africa JALSH 0.7 1.6 0.9 0.9 1.2 0.6 0.8 0.6 0.6 0.6 0.4 0.6 13.6
Brazil IBOV 1.7 2.5 1.6 1.4 1.6 1.1 1.3 1.1 1.0 1.6 1.6 1.5 25.0
Mexico BOLSA 1.1 1.6 1.0 0.8 0.8 0.8 0.8 0.7 0.6 1.3 0.7 0.8 15.3
Chile IPSA 0.8 1.0 0.7 0.4 0.5 0.7 0.9 0.5 0.5 0.9 0.4 0.7 11.1
Argentina INMEX 1.1 1.7 1.0 0.8 0.8 0.8 0.8 0.7 0.6 1.3 0.7 0.9 15.9
India SENSEX 1.3 3.8 1.3 1.0 0.9 0.7 0.9 0.7 0.8 1.5 0.8 1.0 23.8
India S&P CNX NIFTY 1.1 4.2 1.5 1.3 1.0 0.8 1.0 0.7 0.7 0.7 0.8 1.1 26.1
Note: Daily volatility is computed as the standard deviation of daily returns on closing values of indices for the respective months. Annualised volatility is calculated as daily volatility for the financial year multiplied by the square root of number of trading days during the period.
Source: Bloomberg Financial Services.
51 Annual Report 2004-05
Table 2.24: P/E Ratio, Return and Volatility of Select International Indices (2004-05)
P/E Ratio: P/E Ratio: Percentage Year-on- Annualised Country Index End-March End-March Variation Year Index Volatility 2004 2005 in P/E Ratio Return
1234567
DEVELOPED MARKETS USA DJIA 19.2 17.4 -9.5 1.4 10.3 UK Footsie 23.4 18.9 -19.0 11.6 9.5 Europe DJ Stoxx 17.4 14.4 -17.2 9.6 12.6 France CAC 17.8 14.6 -18.0 12.2 12.8 Germany DAX 26.1 15.5 -40.7 12.8 14.3 Australia AS 30 23.6 21.3 -9.7 20.0 6.8 Hong Kong HSI 17.3 14.7 -14.8 6.6 15.1 Singapore STI 16.3 11.5 -29.6 15.2 11.5 EMERGING MARKETS Russia CRTX 11.5 11.2 -2.6 -23.1 36.4 Taiwan TWSE 20.6 14.7 -28.8 -7.9 20.9 Malaysia KLCI (Comp) 16.5 14.4 -12.4 -3.4 10.2 Thailand SET 20.1 9.9 -50.8 5. 3 20.3 China SHCOMP 38.7 18.6 -52.0 -32.2 20.4 S Africa JALSH 16.6 14.4 -13.0 24.4 13.6 Brazil IBOV 14.4 11.0 -23.6 20.2 25.0 Mexico BOLSA 13.6 11.8 -13.7 24.1 15.3 Chile IPSA 24.9 16.6 -33.3 34.5 11.1 India BSE SENSEX 18.6 15.6 -16.1 16.1 23.8 India S&P CNX NIFTY 20.7 14.6 -28.9 14.9 26.1
Source: Bloomberg Financial Services.
52 Part Two: Review of Trends and Operations
IX. Dematerialisation investors for managing various types of risks. In order to speed up the transfer and Moreover, several hybrid derivative products ownership of securities and also to reduce are also offered through financial engineering risks associated with transfer of shares, SEBI which are tailor made to suit the requirements has pursued the policy of dematerialisation of the clients. The underlying assets have since 1996. The number of companies signed been broadly securities, commodities and up for dematerialisation in NSDL increased foreign currencies. The commodity and from 5,216 in 2003-04 to 5,537 in 2004-05. currency related derivatives are regulated by In case of CDSL, the number rose from 4,810 Forward Market Commission and RBI, in 2003-04 to 5,068 in 2004-05. The number respectively, while SEBI regulates derivatives of companies available at NSDL for on securities. dematerialisation also increased from 5,212 Indian stock market provides various in 2003-04 to 5,536 in 2004-05. The number kinds of derivative instruments to investors for of dematerialised shares in NSDL went up hedging and investment purposes. The by 53.7 per cent to 12,86,630 lakh in 2004- trading platform in derivative instruments is 05 from 8,36,935 lakh shares in 2003-04. In offered by BSE and NSE only. Derivatives CDSL, the number of shares dematerialised trading began with the launch of index futures rose by 36.2 per cent to 1,90,800 lakh in in June 2000 followed by index options, single 2004-05 as compared with 1,40,100 lakh in stock options and single stock futures in 2001. 2003-04 (Table 2.25). Interest rate futures were launched in June The depository participants (DPs) of 2003. There is hardly any secondary market NSDL were available at 340 cities in 2004- trading in interest rate futures. The derivative 05 compared to 241 in 2003-04. Similarly, the products have a monthly maturity cycle. From depository participants of CDSL were September 13, 2004 onwards, weekly stock available at 124 cities in 2004-05, higher than and index options cycle was launched on the that of 108 in 2003-04. In terms of absolute derivative segment of BSE. figures, the reach of DPs of NSDL and CDSL The combined turnover in derivatives in increased by 99 and 16 locations, respectively both the exchanges was much higher than in 2004-05. the combined turnover in the cash segment The dematerialisation process in bonds (Chart 2.8). The last four months of fiscal year and commercial paper was also accelerated 2004-05 saw higher derivatives turnover. The in 2004-05. The total value of dematerialised picture is different if we take stock exchanges bonds in NSDL rose from Rs.2,48,190 crore individually. The turnover of derivatives at in 2003-04 to Rs.2,81,205 crore in 2004-05, BSE was a meager 3.09 per cent of its own an increase of 13.3 per cent (Table 2.26). The cash market turnover. On the other hand, total value of dematerialised commercial NSE derivatives turnover was 223 per cent paper also increased in NSDL from Rs.10,229 of its cash market turnover during 2004-05. crore in 2003-04 to Rs.15,880 crore in 2004- During 2004-05, the combined turnover 05, a rise of 55.2 per cent. in the derivative segments of NSE and BSE witnessed an increase of 19.6 per cent over X. Derivatives Market in India the previous year (Table 2.27). The total Investors require derivative instruments number of contracts traded in the derivative for effective risk management. Financial segments of NSE and BSE together rose by derivatives such as futures, options and 35.4 per cent to 7,75,48,904 in 2004-05 from swaps are conventionally used by the 5,72,69,034 in 2003-04. The derivative market
53 Annual Report 2004-05
Table 2.25: Depository Statistics as at end-March: Equity Shares
NSDL CDSL Particulars 2003-04 2004-05 2003-04 2004-05 12345 Companies signed up 5,216 5,537 4,810 5,068
Companies – available for demat 5,212 5,536 4,810 5,068
Demat : Quantity of shares (lakh) 8,36,935 12,86,630 1,40,100 1,90,800
Total no. of shares settled in demat (lakh) 2,89,360 3,69,401 97,540 1,32,750
Total value of shares settled in demat (Rs. crore) 3,01,079 3,97,031 83,715 89,399
Market capitalisation of companies in demat (Rs. crore) 11,07,084 16,38,316 11,92,263 16,71,226
Cities According to No. of DP Locations
No. of DP Locations Cities Cities
1 – 10 217 298 105 119
11 – 20 15 26 1 3
21 – 50 2 8 1 1
51 – 100 5 3 0 0
> 100 2 5 1 1
Total 241 340 108 124
Source: NSDL, CDSL.
54 Part Two: Review of Trends and Operations
Table 2.26: Depository Statistics: Debenture / Bonds and Commercial Paper (Rs. crore) Debentures / Bonds Commercial Paper Particulars 2003-04 2004-05 2003-04 2004-05 NSDL CDSL NSDL CDSL NSDL CDSL NSDL CDSL 123456789 No. of issuers 570 255 602 318 357 69 365 78 No. of active instruments 7,477 3,453 6,937 3,953 427 74 426 113 Demat value 2,48,190 5,623 2,81,205 6,456 10,229 396 15,880 613
Source: NSDL, CDSL. is dominated by NSE with its share of 99.3 in terms of number of contracts as well as per cent in the turnover as well as in the notional value went up significantly since number of transactions. The highest number September 2004. of derivative contracts was recorded in March Product-wise, single stock futures 2005 and the lowest in November 2004. continued to remain the most popular product Similarly, the highest turnover in terms of followed by index futures, stock options and notional value was recorded in March 2005 index options (Table 2.28, 2.29 and Chart 2.9). and lowest in June 2004. The open interests As mentioned earlier, BSE introduced weekly
Table 2.27: Trends in Turnover and Open Interest in Derivatives at NSE & BSE
Open Interest at the end of Total the year / month Year / Month Turnover Notional Turnover No. of Contracts No. of Contracts (Rs. crore) (Rs. crore) NSE BSE NSE BSE NSE BSE NSE BSE 1 2 3 456789 2003-04 5,68,86,776 3,82,258 21,30,649 12,452 2,35,792 35 7,187 1 2004-05 7,70,17,185 5,31,719 25,47,053 16,112 5,92,646 0 21,052 0 Apr. 04 65,68,668 2,892 2,20,299 85 2,49,845 8 7,668 0 May 04 64,81,198 1,146 1,94,763 39 1,79,487 7 4,696 0 June 04 58,22,819 0 1,58,306 0 2,01,871 0 5,367 0 July 04 61,34,513 10 1,75,345 0 2,06,709 0 5,964 0 Aug. 04 59,78,503 0 1,76,006 0 2,61,185 0 7,332 0 Sept. 04 59,31,706 39,788 1,78,380 2,056 4,46,299 382 13,353 11 Oct. 04 56,66,914 1,15,298 1,82,224 3,290 3,21,545 928 9,845 26 Nov. 04 53,14,655 1,57,458 1,75,805 4,695 3,71,842 1,050 12,239 33 Dec. 04 75,15,469 1,54,902 2,68,227 4,947 4,26,606 478 15,221 16 Jan. 05 72,46,915 43,942 2,65,290 1,415 3,88,354 246 13,604 8 Feb. 05 66,61,661 9,213 2,53,551 304 4,04,809 25 14,900 1 Mar. 05 76,94,164 7,070 2,98,857 243 5,92,646 0 21,052 0
Source: NSE, BSE.
55 Annual Report 2004-05
Table 2.28: Product-wise Derivatives Turnover at NSE (Percentage Share to Total)
Index Index Single Stock Single Stock Year/ Month Total Futures Options Options Futures 1 2345 6 2003-04 April 14.0 3.4 23.1 59.5 100.0 May 11.8 3.0 23.9 61.3 100.0 June 12.8 2.7 20.7 63.8 100.0 July 13.4 2.9 19.5 64.2 100.0 August 17.8 2.7 14.4 65.0 100.0 September 24.8 2.7 11.0 61.5 100.0 October 37.6 3.0 15.3 97.6 100.0 November 25.8 2.0 8.5 63.7 100.0 December 27.4 2.3 7.2 63.2 100.0 January 30.8 2.1 6.6 60.4 100.0 February 31.7 2.4 6.8 59.2 100.0 March 34.1 3.1 7.4 55.4 100.0 2004-05 April 36.1 3.3 5.6 54.9 100.0 May 42.2 5.3 5.0 47.6 100.0 June 40.4 5.4 4.7 49.5 100.0 July 34.9 5.7 5.9 53.6 100.0 August 32.9 4.2 6.3 56.6 100.0 September 27.7 4.2 8.0 60.1 100.0 October 25.9 4.7 8.1 61.3 100.0 November 21.8 5.0 8.7 64.6 100.0 December 21.7 3.6 7.8 66.9 100.0 January 28.7 4.9 6.3 60.1 100.0 February 28.2 5.2 6.8 59.8 100.0 March 28.9 6.0 6.4 58.7 100.0
Source: NSE.
56 Part Two: Review of Trends and Operations
Table 2.29: Product-wise Derivatives Turnover at BSE (Percentage Share to Total)
Index Index Single Stock Single Stock Year/ Month Total Futures Options Options Futures 1 2345 6 2003-04 April 74.2 Na 1.9 23.8 100.0 May 35.4 Na 17.4 45.6 100.0 June 6.3 Na 27.6 66.1 100.0 July 49.3 Na 3.3 47.4 100.0 August 59.4 Na 0.0 40.5 100.0 September 47.9 Na 0.1 51.9 100.0 October 49.0 Na 0.3 50.8 100.0 November 48.4 Na 0.1 51.4 100.0 December 48.5 Na 1.5 50.1 100.0 January 58.4 Na 2.0 39.6 100.0 February 76.0 Na 13.2 10.8 100.0 March 62.3 Na 17.2 20.4 100.0 2004-05 April 89.6 0.0 0.0 10.4 100.0 May 0.0 0.0 0.0 100.0 100.0 June Na Na Na Na Na July 0.0 0.0 0.0 100.0 100.0 August Na Na Na Na Na September 76.2 20.8 0.0 3.0 100.0 October 84.3 15.6 0.0 0.0 100.0 November 89.3 10.3 0.0 0.4 100.0 December 90.0 8.9 0.0 1.0 100.0 January 77.1 21.1 0.1 1.7 100.0 February 44.3 48.9 0.0 6.8 100.0 March 17.3 75.8 0.0 7.0 100.0
Source: BSE. options for trading in Sensex and three (Table 2.34). At BSE, there were 198 trading selected stocks. Thereafter, there was a members and 62 trading cum clearing significant increase in the turnover of index members at the end of March 2005. The options in BSE (Tables 2.29 and 2.32). percentage share of trading cum clearing However, stock options did not pick up. Month- members in the total F&O turnover was the wise detail derivative transactions in BSE and highest for all the months in 2004-05. It NSE are given in Tables 2.30 to 2.33. increased from 45.7 per cent in April 2004 to 50.8 per cent in March 2005 (Table 2.35). The At NSE, there were 418 trading trading member share in the F&O turnover members at the end of March 2005. There declined from 32.4 per cent in April 2004 to were 160 trading-cum clearing members and 25.8 per cent in March 2005. 96 trading-cum-self-clearing members
57 Annual Report 2004-05
Table 2.30: Trends in Index Futures in NSE & BSE Open Interest (at the end of the Year/ Month) Year / Month Turnover Notional Turnover No. of Contracts No. of Contracts (Rs. crore) (Rs. crore) NSE BSE NSE BSE NSE BSE NSE BSE 123456789 2003-04 1,71,91,668 2,46,443 5,54,463 6,572 37,495 17 1305 0.48 2004-05 2,16,35,449 3,08,950 7,72,174 13,600 93,468 0 3,791 0 Apr. 04 21,64,528 2,633 79,560 76 44,845 0 1,588 0 May 04 25,51,985 0 82,149 0 51,236 0 1,496 0 Jun. 04 21,52,644 0 64,017 0 46,120 0 1,364 0 Jul. 04 19,71,231 0 61,125 0 46,090 0 1,491 0 Aug. 04 18,03,263 0 57,926 0 41,923 0 1,358 0 Sep. 04 14,63,682 30,234 49,500 834 66,514 84 2,311 2 Oct. 04 13,20,173 97,381 47,191 2,775 51,813 533 1,846 15 Nov. 04 10,23,111 1,40,680 38,277 4,193 50,088 606 1,953 19 Dec. 04 14,47,464 1,39,550 58,333 4,454 57,740 263 2,403 9 Jan. 05 19,31,290 33,839 76,151 1,091 58,375 200 2,398 7 Feb. 05 17,29,103 4,077 71,546 135 68,768 15 2,902 1 Mar. 05 20,76,975 1,236 86,398 42 93,468 0 3,791 0
Source: NSE, BSE.
Table 2.31: Trends in Single Stock Futures in NSE & BSE
Open Interest (at the end of the year/ month) Turnover Notional Turnover Year / Month No. of Contracts No. of Contracts (Rs. crore) (Rs. crore) NSE BSE NSE BSE NSE BSE NSE BSE 1 2 3 456789 2003-04 3,23,68,842 1,28,193 13,05,949 5,171 1,53,854 18 4,492 0.58 2004-05 4,70,43,066 6,725 14,84,067 213 3,14,806 46 10,366 0.00 Apr. 04 38,29,403 259 1,21,048 9 1,69,779 43 4,947 0.26 May 04 33,22,799 1,146 92,628 39 98,762 43 2,386 0.19 Jun. 04 31,25,283 0 78,392 0 1,14,925 42 2,873 0.00 Jul. 04 34,92,774 10 94,009 0 1,31,372 41 3,588 0.00 Aug. 04 35,77,911 0 99,591 0 1,67,396 42 4,452 0.00 Sep. 04 37,68,178 1,308 1,07,123 32 2,30,304 42 6,408 0.05 Oct. 04 36,60,047 24 1,11,695 1 2,17,469 45 6,281 0.02 Nov. 04 36,00,135 621 1,13,525 20 2,48,788 46 7,747 0.65 Dec. 04 52,38,498 1,583 1,79,387 50 2,99,997 46 10,256 1.43 Jan. 05 45,51,564 717 1,59,564 24 2,61,971 46 8,632 1.26 Feb. 05 41,67,787 637 1,51,743 21 2,57,797 46 8,969 0.44 Mar. 05 47,08,687 420 1,75,363 17 3,14,806 46 10,366 0.00 Source: NSE, BSE.
58 Part Two: Review of Trends and Operations
Table 2.32: Trends in Index Options in NSE & BSE
Open Interest (at the end of the year/ month) Turnover Notional Turnover Month / Year No. of Contracts No. of Contracts (Rs. crore) (Rs. crore) NSE BSE NSE BSE NSE BSE NSE BSE 1 2 3 456789 2003-04 17,32,414 1 52,823 0.03 14,664 0 519 0 2004-05 32,93,558 75,275 1,21,954 2,297 91,875 0 3,741 0 Apr. 04 1,96,111 0 7,315 0 12,817 0 460 0 May 04 2,96,628 0 10,293 0 14,524 0 431 0 Jun. 04 2,75,825 0 8,473 0 20,161 0 607 0 Jul. 04 3,13,531 0 9,915 0 10,834 0 354 0 Aug. 04 2,26,397 0 7,385 0 22,263 0 727 0 Sep. 04 2,18,355 8,238 7,447 228 59,361 295 2,072 8 Oct. 04 2,35,727 17,883 8,530 514 23,907 394 854 11 Nov. 04 2,33,441 16,156 8,793 482 30,263 423 1,186 13 Dec. 04 2,39,207 13,769 9,711 443 27,061 170 1,126 6 Jan. 05 3,20,098 9,316 12,973 298 36,136 8 1,487 0 Feb. 05 3,13,221 4,499 13,126 149 40,417 0 1,700 0 Mar. 05 4,25,017 5,414 17,992 184 91,875 0 3,741 0
Source: NSE, BSE.
Table: 2.33: Trends in Single Stock Options in NSE & BSE
Open Interest (at the end of the year/ month) Turnover Notional Turnover Year / Month No. of Contracts No. of Contracts (Rs. crore) (Rs. crore) NSE BSE NSE BSE NSE BSE NSE BSE 1 2 3 456789 2003-04 55,83,071 7,621 2,17,212 332 29,779 0 871 0 2004-05 50,45,112 89 1,68,858 3 92,497 0 3,154 0 Apr. 04 3,78,626 0 12,376 0 22,404 0 672 0 May 04 3,09,786 0 9,693 0 14,965 0 382 0 Jun. 04 2,69,067 0 7,424 0 20,665 0 523 0 Jul. 04 3,56,977 0 10,296 0 18,413 0 531 0 Aug. 04 3,70,932 0 11,104 0 29,603 0 795 0 Sep. 04 4,81,491 8 14,309 0 90,120 1 2,562 0 Oct. 04 4,50,967 10 14,808 0 28,356 0 864 0 Nov. 04 4,57,968 1 15,210 0 42,703 0 1,354 0 Dec. 04 5,90,300 0 20,796 0 41,808 0 1,436 0 Jan. 05 4,43,963 70 16,601 2 31,872 0 1,086 0 Feb. 05 4,51,550 0 17,137 0 37,827 0 1,329 0 Mar. 05 4,83,485 0 19,103 0 92,497 0 3,154 0
Source: NSE, BSE.
59 Annual Report 2004-05
Table 2.34: Category of Members at Derivative Segment of BSE and NSE as on March 31, 2005
Type of Member BSE NSE 123 Trading Members 198 418 Professional Clearing Members 4 18 Trading-cum-Clearing Members 62 160 Trading-cum-Self-Clearing Members 4 96 Total 268 692
Source: NSE, BSE.
Table 2.35: Shares of Various Classes of Traders/ Investors in F & O Turnover in 2004-05
Trading Volume (Rs. crore) Percentage Share
Trading Trading Trading Trading Month Trading cum cum Trading cum cum Members Clearing Self Total Members Clearing Self Members Clearing Members Clearing Members Members
1 2 345678
Apr. 04 1,42,612 2,01,310 96,846 4,40,769 32.36 45.67 21.97
May 04 1,20,176 1,83,453 85,974 3,89,603 30.85 47.09 22.07
June 04 98,932 1,44,612 73,067 3,16,611 31.25 45.67 23.08
July 04 1,12,114 1,61,016 77,562 3,50,691 31.97 45.91 22.12
Aug. 04 1,08,578 1,62,572 80,862 3,52,011 30.85 46.18 22.97
Sep. 04 1,11,252 1,70,321 77,375 3,58,948 30.99 47.45 21.56
Oct. 04 1,19,216 1,75,497 76,315 3,71,028 32.13 47.30 20.57
Nov. 04 1,13,291 1,72,818 74,889 3,60,999 31.38 47.87 20.74
Dec. 04 1,67,456 2,57,587 1,21,307 5,46,350 30.65 47.15 22.20
Jan. 05 1,56,600 2,56,866 1,19,943 5,33,409 29.36 48.16 22.49
Feb. 05 1,34,040 2,56,234 1,17,437 5,07,712 26.40 50.47 23.13
Mar. 05 1,54,490 3,03,868 1,39,841 5,98,199 25.83 50.80 23.38
Source: NSE, BSE.
Put Call Ratio (PCR) is one of the showing that number of calls were greater important indicators used by market than number of puts. In the last four months, participants in gauging the market the ratio increased with range bound Nifty. movements. Index put call ratio in fiscal year PCR for the stocks was much lower in range 2004-05 was in range of 51-99 per cent of 23 to 39 per cent (Chart 2.10).
60 Part Two: Review of Trends and Operations
3. MUTUAL FUNDS mobilisation by private sector mutual funds The growth of mutual fund industry came down significantly in 2004-05. The globally can be accredited to increase in the major reason behind such performance of investment opportunities due to liberalisation MFs has been the redemption pressures of capital markets world-wide. In emerging mainly on income and gilt schemes. In an economies, the demand for mutual fund environment of rising interest rates, gilt products is expected to increase further due schemes lost some of its appeal. Part of the to privatisation of the pension /insurance proceeds redeemed from the mutual fund systems. Indian investors prefer to invest in investments might have been reinvested in capital markets through some institutional the small savings schemes due to attractive structure having professional expertise in fund rates offered by the Government along with management. the fiscal incentives. Net resource mobilisation by mutual Scheme-wise, the gross amount of funds funds (MFs) declined by 95.3 per cent to Rs. mobilised by income oriented schemes 2,200 crore in 2004-05 as compared with amounted to Rs. 7, 98,674 crore in 2004-05 Rs. 46,808 crore in the previous year (Table whereas the amount mobilised by equity and 2.36). The UTI Mutual Fund and other public balanced schemes amounted to Rs. 37,280 sector mutual funds witnessed net outflows crore and Rs. 3,755 crore, respectively. The of Rs.2,722 crore and Rs.2,677 crore, percentage share of equity and balanced respectively in 2004-05 as against net inflow schemes together in gross funds mobilised of Rs.1,667 crore and Rs. 2,597 crore in was 4.89 per cent only which was meager as 2003-04. The sectoral shares in the gross compared to income oriented schemes with a mobilisation and redemption indicate share of 95.11 per cent. Similar trend was dominance of private sector mutual funds observed in case of repurchases where (Chart 2.11). However, the net resource income schemes had a lion’s share of 96 per
61 Annual Report 2004-05
cent with gross redemption of Rs. 8, 03,918 2.38 and Chart 2.12). There were 403 open- crore. There was a net outflow of Rs. 5,244 ended schemes of which 200 were income crore from income oriented schemes in 2004- oriented, 169 equity oriented and the rest 34 05. Equity and balanced schemes experienced were balanced schemes in 2004-05. There a net inflow of Rs. 7,100 crore and Rs. 345 were 47 close-ended schemes of which 27 crore, respectively during 2004-05. were income oriented, 19 equity oriented and only one was balanced scheme. The total assets under management went up by 7.2 per cent to Rs. 1,49,600 crore by In the secondary market, mutual funds end of March 2005 from Rs. 1,39,616 crore have an important role to play. Their gross as on March 31, 2004. In India, the assets purchases and sales (equity + debt) stood at under equity funds are meagre as compared Rs. 1,07,232 crore and Rs. 89,796 crore, to debt similar to many other emerging respectively in the secondary market. The net markets. Assets under income and debt purchase of both equity and debt securities oriented schemes in India were by Mutual Funds amounted to Rs. 17,435 Rs. 1,06,250 crore (71.0 per cent) whereas crore in 2004-05 of which 97.4 per cent was assets under equity oriented schemes were in debt (Table 2.39). Another important only Rs. 38, 483 crore (25.7 per cent). There institutional investor in the capital market was were 450 mutual fund schemes in total as on the Foreign Institutional Investors (FIIs). March 31, 2005 of which, 227 were income/ Comparing both the classes of institutional debt oriented schemes, 188 were growth/ investors, it was found that net investment equity oriented schemes and the remaining by mutual funds in debt at Rs. 16,987 crore 35 were balanced schemes (Table 2.37). was much higher than that by FII investment at Rs. 1,759 crore (Table 2.40 and Chart Break up of schemes into open-ended 2.13). Reverse was the case with equity and close-ended schemes shows the where net investment by FII was much higher dominance of open ended schemes (Table (Rs.44,123 crore) as compared with mutual
Table 2.36: Sector-wise Resource Mobilisation by Mutual Funds during 2004-05 (Rs.crore)
Private Sector MFs Public Sector MFs UTI MF* Grand Particulars Open Close Open Close Open Close Total Total Total Total ended ended ended ended ended ended 1 234567891011 Mobilisation 7,20,603 15,860 7,36,463 55,771 818 56,589 45,630 1,026 46,656 8,39,708 of Funds (5,31,939) (2,710) (5,34,649) (31,548) (0) (31,548) (23,992) (0) (23,992) (5,90,189) Repurchase/ 7,18,440 10,423 7,28,864 58,976 290 59,266 48,560 818 49,378 8,37,508 Redemption (4,90,537) (1,567) (4,92,104) (28,911) (41) (28,952) (21,999) (327) (22,326) (5,43,382) Amount Net Inflow/ 2,163 5,437 7,600 -3,205 528 -2,677 -2,930 208 -2,722 2,200 Outflow of (41,402) (1,143) (42,545) (2,638) (-42) (2,597) (1,994) (-327) (1,667) (46,809) Funds
Note : Figures in parentheses relate to 2003-04. * Net assets of Rs. 980.26 crore pertaining to Fund of Funds schemes is not included in above data (i.e. for the period April 2004- March 2005).
62 Part Two: Review of Trends and Operations
Table 2.37: Scheme-wise Resource Mobilisation by and Assets under Management of Mutual Funds: 2004-05 (Rs. crore)
Cumulative Percentage No. Gross Net Inflow/ Asset Under Variation Repurchase/ Schemes of Funds Outflow of Management over Redemption Schemes Mobilised Funds as on March March 31, 31, 2005 2004
1 234567
A : Income / Debt 227 7,98,674 8,03,918 -5,244 1,06,250 -3.63 Oriented Schemes of which
i. Liquid/ Money Market 39 6,38,594 6,28,246 10,348 54,068 29.65
ii. Gilt 30 4,361 5,706 -1,345 4,576 -24.05
iii. Debt 158 1,55,719 1,69,966 -14,247 47,606 -23.86
B : Growth / Equity 188 37,280 30,180 7,100 38,484 52.22 Oriented Schemes of which
i. ELSS 37 155 349 -194 1,727 3.49
ii. Others 151 37,126 29,832 7,294 36,757 55.66
C: Balanced Schemes 35 3,755 3,410 345 4,867 19.29
Total (A+B+C) 450 8,39,708 8,37,508 2,200 1,49,600 7.15
Table 2.38: Number of Schemes by Investment Objectives as on March 31, 2005
Schemes Open-ended Close-ended Total
1234
A : Income / Debt Oriented Schemes 200 27 227
i. Liquid/ Money Market 39 0 39
ii. Gilt 30 0 30
iii. Debt(other than assured return) 131 27 158
iv. Debt (assured return) 0 0 0
B : Growth / Equity Oriented Schemes 169 19 188
i. ELSS 20 17 37
ii. Others 149 2 151
C: Balanced Schemes 34 1 35
Total (A+B+C) 403 47 450
63 Annual Report 2004-05
funds (Rs. 448 crore). Less investment in debt cumulative limits of US $ 1.75 billion on market by FIIs can be explained in terms of G-sec including Treasury bills and US $ 500 regulatory restrictions which put the million on corporate debt.
64 Part Two: Review of Trends and Operations
Table 2.39: Transactions on Stock Exchanges by Mutual Funds (2004-05) (Rs. crore) Equity Debt Total Net Net Net Month Gross Gross Pur- Gross Gross Pur- Gross Gross Pur- Purchases Sales chases/ Purchases Sales chases/ Purchases Sales chases/ Sales Sales Sales 12345678910 Apr. 04 3,675 3,895 -219 6,106 3,654 2,452 9,781 7,548 2,232 May 04 4,857 3,852 1,005 4,312 3,684 627 9,169 7,536 1,632 June 04 2,130 2,390 -260 4,067 5,338 -1,272 6,197 7,728 -1,531 July 04 2,679 3,149 -470 4,357 4,006 350 7,036 7,156 -120 Aug. 04 2,822 2,920 -98 4,583 3,228 1,355 7,405 6,148 1,257 Sep. 04 3,530 3,759 -229 4,621 3,412 1,209 8,151 7,171 980 Oct. 04 2,861 3,283 -422 2,355 2,819 -464 5,216 6,102 -886 Nov. 04 3,589 4,285 -695 3,709 2,527 1,182 7,299 6,812 487 Dec. 04 4,796 5,152 -356 6,573 3,873 2,701 11,369 9,024 2,345 Jan. 05 3,768 3,220 548 5,818 3,137 2,680 9,585 6,357 3,228 Feb. 05 3,845 3,743 102 7,498 4,744 2,754 11,343 8,487 2,855 Mar. 05 6,493 4,950 1,543 8,189 4,776 3,413 14,682 9,726 4,956 Total 45,045 44,597 448 62,186 45,199 16,987 1,07,232 89,796 17,435
Table 2.40: Investment by MFs and FIIs (Rs. crore) Net Investment Net Investment by FIIs 2004-05 by Mutual Funds Equity Debt Equity Debt 12345 April -219 2,452 7,638 -919 May 1,005 627 -3,247 -300 June -260 -1,272 516 -790 July -470 350 914 -200 August -98 1,355 2,892 -371 September -229 1,209 2,386 190 October -422 -465 3,263 -1,235 November -695 1,182 6,741 1,445 December -356 2,701 6,684 3,456 January 548 2,680 457 -774 February 102 2,754 8,376 833 March 1,543 3,413 7,502 424
Total 448 16,987 44,123 1,759
65 Annual Report 2004-05
4. FOREIGN INSTITUTIONAL by FIIs in 2004-05 was US $ 10.17 billion, INVESTORS which was the highest ever net investment Foreign Institutional Investors (FIIs) by FIIs in any year since 1992-93 when FIIs invest in various countries including emerging were allowed to invest in Indian securities markets in order to reduce risk through (Chart 2.15). The cumulative investment by portfolio diversification and also to receive FIIs by the end of 2004-05 was US $ 35.93 additional returns. Country-specific factors are billion. important determinants of such institutional investment. Strong macro-economic The pace of investment was slow in the fundamentals of the Indian economy coupled first two quarters of the year, but increased with other positive factors like good corporate considerably in the subsequent months (Table results, low inflation, abolition of long-term 2.42). The gross purchases and sales in 2004- capital gains tax, transparent regulatory 05 were Rs. 2,16,953 crore and Rs. 1,71,073 system, etc., were the major factors which crore, respectively. Comparing with 2003-04, influenced the FII investment in India during there was an increase of 49.77 per cent in 2004-05. The total number of FIIs registered gross purchases and 72.64 per cent in gross with SEBI went up from 540 as on March sales by FIIs. The highest gross purchases 31, 2004 to 685 as on March 31, 2005, an and sales were observed in the month of increase of 145 over the year. March 2005. The highest net investment was The FIIs continued to remain bullish on witnessed in the month of December 2004 (US the Indian securities for the second year in $ 2.23 billion), followed by February 2005 (US succession. The net FII investment in 2004- $ 2.10 billion), March 2005 (US $ 1.81 billion) 05 (including debt) was Rs. 45,881 crore etc. Bulk of the net investment by FIIs was in which was marginally higher than Rs.45,765 equities, i.e., 96 per cent of net investment or crore in 2003-04 (Table 2.41 and Chart 2.14). Rs. 44,123 crore, whereas investment in debt In terms of the US Dollar, the net investment was only Rs. 1,759 crore (Table 2.43).
66 Part Two: Review of Trends and Operations
Table 2.41: Investments by FIIs (Rs. crore) Cumulative Gross Gross Net Net Net Year Purchases Sales Investment Investment Investment (Rs. crore) (Rs. crore) (Rs. crore) (US $ Mn.) (US $ Mn.) 1 23 456
1992-93 17 4 13 4 4
1993-94 5,593 466 5,126 1,634 1,638
1994-95 7,631 2,835 4,796 1,528 3,167
1995-96 9,694 2,752 6,942 2,036 5,202
1996-97 15,554 6,979 8,574 2,432 7,634
1997-98 18,695 12,737 5,957 1,650 9,284
1998-99 16,115 17,699 -1,584 -386 8,898
1999-00 56,856 46,734 10,122 2,339 11,237
2000-01 74,051 64,116 9,934 2,159 13,396
2001-02 49,920 41,165 8,755 1,846 15,242
2002-03 47,061 44,373 2,689 562 15,805
2003-04 1,44,858 99,094 45,765 9,950 25,755
2004-05 2,16,953 1,71,072 45,881 10,172 35,927
67 Annual Report 2004-05
The FIIs continue to be one of the major Mutual funds’ exposure to equity market players in the stock market (Chart 2.16). The improved significantly in the last quarter of mutual funds were generally active when FIIs the year reflecting large mobilisation of were cautious, except in March 2005, when resources under equity schemes. both the institutional investors were active.
Table 2.42: Month-wise Investments by FIIs during 2004-05
Cumulative Gross Gross Net Net Net Month Purchases Sales Investment Investment Investment (Rs. crore) (Rs. crore) (Rs. crore) (US $ Mn.) (US $ Mn.)
1 23 456
April 19,692 12,972 6,720 1,483 27,237 May 15,655 19,201 -3,546 -806 26,431 June 10,894 11,168 -274 -57 26,374 July 11,247 10,534 713 157 26,531 August 12,856 10,335 2,521 550 27,081 September 13,097 10,522 2,575 556 27,637 October 16,063 14,035 2,028 439 28,076 November 21,302 13,117 8,185 1,783 29,859 December 25,841 15,701 10,140 2,229 32,087 January 17,502 17,819 -317 -75 32,013 February 24,360 15,151 9,209 2,101 34,114 March 28,444 20,517 7,927 1,813 35,927 Total 2,16,953 1,71,073 45,881 10,172 35,927
68 Part Two: Review of Trends and Operations
The FIIs were permitted to trade in futures was 59.0 per cent by end March 2005 derivatives market since February 2002. The followed by index futures (29.7 per cent). The cumulative FII investment in derivatives was share in index options was 10.9 per cent Rs. 1,52,970 crore as on March 31, 2005. whereas the lowest investment was in stock Open interest position of FIIs in single stock options (0.4 per cent) (Table 2.44).
Table 2.43: Instrument-wise FII Investment (2004-05) (Rs. crore) Equity Debt Month Gross Gross Net Gross Gross Net Purchases Sales Investment Purchases Sales Investment 1234567 April 19,692 12,053 7,638 0 919 -919 May 15,532 18,778 -3,247 123 423 -300 June 10,634 10,117 516 261 1,051 -790 July 11,096 10,183 914 150 351 -200 August 12,595 9,702 2,892 261 633 -371 September 12,385 10,000 2,386 712 522 190 October 15,752 12,489 3,263 310 1,546 -1,235 November 18,340 11,600 6,741 2,962 1,518 1,445 December 20,626 13,943 6,684 5,215 1,760 3,456 January 16,651 16,194 457 851 1,625 -774 February 22,388 14,012 8,376 1,972 1,139 833 March 27,311 19,808 7,502 1,133 709 424 Total 2,03,002 1,58,879 44,123 13,951 12,193 1,759
69 Annual Report 2004-05
Table 2.44: Notional Value of Open Interest of FIIs in Derivatives (Rs. crore) Items Apr. 04 May 04 Jun. 04 Jul. 04 Aug. 04 Sep. 04 Oct. 04 Nov. 04 Dec. 04 Jan. 05 Feb. 05 Mar. 05
12345678910111213 Index Futures 998 1,327 996 1,011 914 1,862 1,770 1,735 2,019 2,077 2,407 3,567
Index Options 47 22 57 17 214 478 176 321 303 707 527 1,307 Stock Futures 2,944 1,416 1,522 1,403 2,166 3,013 3,720 3,735 6,537 5,963 5,838 7,072
Stock Options 0 2 13 0 8 51 5 5 10 2 9 43 Total 3,989 2,767 2,588 2,431 3,302 5,404 5,671 5,796 8,869 8,749 8,781 11,989
Change in open position 594 -1,222 -179 -157 871 2102 267 125 3,073 -120 32 3,208 % Change 17.51 -30.63 -6.47 -6.07 35.83 63.66 4.94 2.20 53.02 -1.35 0.37 36.53
Cumulative FII Inves- tment 1,13,809 1,10,263 1,09,989 1,10,702 1,13,223 1,15,798 1,17,826 1,26,011 1,36,151 1,35,834 1,45,043 1,52,970 Change in Cumulative FII Investment 6,720 -3,546 -274 713 2,521 2,575 2,028 8,185 10,140 -317 9,209 7,927
% Change 6.27 -3.12 -0.25 0.65 2.28 2.27 1.75 6.95 8.05 -0.23 6.78 5.47
5. DEVELOPMENTS IN DEBT in short-term rates. In the Euro area, as the MARKET growth impulse was rather hesitant, the policy rates remained unchanged. Nevertheless, the I. Bond Markets: Global Trend shape of the yield curve was flat as the Bond market behaviour in the major decline in the long-term yields was more international markets was mainly influenced pronounced. With the flattening of the yield by international liquidity and policy stance of curve, the term spread narrowed in most parts the central banks. The overall liquidity of the globe. condition continued to remain comfortable Following comfortable liquidity condition, during 2004-05. This had an enduring impact the credit spread also narrowed in the major on the bond prices. As a result, the long-term economies. In the emerging markets, yields in the major economies either declined particularly in the Asia-Pacific region, the or remained broadly steady over the year. The outlook was better with upgradation of short term yields, however, looked up sovereign ratings of many countries such as heralding turnaround in the interest rate cycle Brazil, India, Indonesia, Malaysia, Mexico, following signs of rising inflation expectations. Russia, South Africa, Turkey and Venezuela. Many central banks, including the Federal The local currency bonds were in demand Reserve revised their policy rates upward in due to yield differential. There was large inflow a measured way. Consequently, the sovereign of funds into the debt markets of the emerging yield curve continued to flatten, driven by rise economies in search of high yields. In the
70 Part Two: Review of Trends and Operations
emerging markets, together with bond prices, 2005 (Chart 2.17). The average daily traded other asset prices like equity, real estate also value worked out for 2004-05 was Rs.3,039 hardened significantly during 2004-05. crore, which was 32.1 per cent lower than that of Rs.4,477 crore for 2003-04. Month- II. Indian Wholesale Debt Market wise, the highest average daily traded value In the WDM segment of NSE, the net was recorded in April 2004 (Rs.6,067 crore). traded value and the number of trades The trend in the number of trades broadly declined by 32.6 per cent and 34.4 per cent, mimicked the trend in the net traded value. respectively in 2004-05 over the previous Instrument-wise, the government dated year. Month-wise trend shows that there was securities continued to dominate the a continuous fall in the net traded value from transactions in the WDM segment of NSE, April 2004 to August 2004 (Table 2.45). although their share declined considerably However, in September 2004, it went up to from 92.6 per cent in 2003-04 to 81.7 per Rs.87,695 crore registering a growth of 37.4 cent in 2004-05 (Table 2.46). On the other per cent over the previous month. The net hand, the share of Treasury bills traded in traded value could not reach this level the WDM segment of NSE rose significantly thereafter. The highest net traded value was from 4.2 per cent to 14.1 per cent during the observed in April 2004 (Rs.1,33,478 crore) same period. This indicates the preference and the lowest in November (Rs.45,541 crore) of the market players to remain liquid in an during 2004-05. The net traded value uncertain interest rate environment. The remained below the previous year’s level in combined share of the government dated each month except April 2004 and February securities and Treasury bills also declined,
Table 2.45: Business Growth on the WDM Segment (NSE)
2003-04 2004-05 Net Average Number Net Average Number Month Traded Daily Traded of Traded Daily Traded of Value Value Trades Value Value Trades 123456 7 Apr. 1,01,052 4,812 15,512 1,33,478 6,067 19,075 May 1,23,359 5,140 18,651 91,340 3,806 13,097 Jun. 1,26,672 5,067 18,400 82,453 3,171 11,382 Jul. 1,31,027 4,853 18,220 66,012 2,445 9,303 Aug. 1,62,737 6,509 22,753 63,806 2,552 9,241 Sep. 1,25,199 4,815 17,152 87,695 3,508 12,659 Oct. 1,43,404 5,975 20,465 55,770 2,425 8,437 Nov. 80,903 3,518 11,737 45,541 1,980 5,767 Dec. 83,906 3,227 12,529 72,593 2,792 10,321 Jan. 77,533 2,982 11,407 61,205 2,550 8,384 Feb. 61,499 2,795 8,675 73,588 3,066 10,156 Mar. 98,806 3,952 14,017 53,812 2,242 6,486 Total 13,16,097 4,477 1,89,518 8,87,294 3,039 1,24,308
Source: NSE.
71 Annual Report 2004-05
Table 2.46: Instrument-wise Share of Securities Traded in the WDM Segment (NSE) (Per cent) 2003-04 2004-05 PSU / PSU / Govt. Govt. Institu- Institu- Month Dated T-Bills Others Dated T-Bills Others tional tional Securities Securities Bonds Bonds
1 23 45 67 89
Apr. 91.01 4.95 2.67 1.37 92.46 4.01 1.72 1.81
May 93.36 3.07 2.09 1.48 87.67 8.89 1.89 1.55
Jun. 95.80 2.32 1.11 0.77 84.82 10.63 2.55 2.00
Jul. 94.48 3.20 1.67 0.65 81.72 13.72 2.07 2.49
Aug. 94.53 2.60 2.15 0.72 85.79 10.04 2.15 2.02
Sep. 91.32 5.17 2.56 0.95 84.90 11.31 1.54 2.25
Oct. 92.74 3.92 2.40 0.94 82.74 13.61 1.58 2.07
Nov. 91.62 5.72 1.68 0.98 70.14 25.61 1.96 2.29
Dec. 91.31 5.34 2.24 1.11 78.42 16.75 1.88 2.95
Jan. 90.71 5.98 1.66 1.65 73.80 21.48 2.15 2.57
Feb. 90.89 6.42 1.78 0.91 73.99 21.37 2.51 2.13
Mar. 89.29 5.79 2.48 2.44 62.46 31.38 2.42 3.74
Average 92.60 4.23 2.06 1.11 81.69 14.07 2.01 2.23
Source: NSE.
72 Part Two: Review of Trends and Operations
Table 2.47: Share of Participants in Turnover of WDM Segment (NSE) (Per cent) 2003-04 2004-05 FIs/MFs/ FIs/MFs/ Month Trading Primary Indian Foreign Trading Primary Indian Foreign Corp- Corp- Members Dealers Banks Banks Members Dealers Banks Banks orates orates 1 234 5 67891011 Apr. 32.55 3.40 18.65 35.91 9.49 33.75 5.69 18.92 35.71 5.93 May 32.28 3.83 18.74 36.89 8.26 32.90 5.24 17.88 35.57 8.41 Jun. 33.59 3.58 19.03 37.08 6.72 30.78 6.03 19.60 33.96 9.63 Jul. 33.15 5.10 17.77 37.37 6.61 33.33 7.03 19.15 28.88 11.61 Aug. 33.34 4.97 16.34 39.09 6.26 32.27 6.04 20.60 25.23 15.86 Sep. 36.13 5.33 15.32 37.01 6.21 33.97 4.99 21.49 25.79 13.76 Oct. 35.78 5.81 16.38 35.86 6.17 34.17 4.54 18.64 27.08 15.57 Nov. 40.68 5.16 14.61 33.90 5.65 36.30 4.28 16.73 23.30 19.39 Dec. 35.49 4.25 16.00 37.65 6.61 39.94 3.33 18.10 23.94 14.69 Jan. 35.78 4.47 17.38 34.85 7.52 34.07 4.04 16.80 26.64 18.45 Feb. 36.32 3.93 17.28 32.54 9.93 34.26 4.66 15.27 29.74 16.07 Mar. 36.21 3.96 16.30 33.82 9.71 33.15 4.73 16.91 33.49 11.72 Average 34.80 4.56 17.03 36.36 7.25 33.96 5.14 18.50 29.90 12.50
Source: NSE. although modestly from 96.8 per cent in 2003- (Table 2.47). One of the most notable 04 to 95.8 per cent in 2004-05. The developments during 2004-05 was the percentage share of “others” which include significant decline in the share of Indian banks mainly corporate debt securities, improved which fell from 36.4 per cent in 2003-04 to from 1.1 per cent to 2.2 per cent during the 29.9 per cent in 2004-05. Besides more same period. This is a healthy sign given the reliance on repo transactions, the RBI policy need for the development of the corporate to allow Indian banks to hold more government debt market. The share of PSU/institutional securities under the category of ‘held to bonds remained unchanged at 2.0 per cent. maturity’ could be the possible reason for With regard to the market share of decline in their share. It is also important to participants, the trading members dominated note that the share of foreign banks jumped the debt market although their share of from 7.3 per cent to 12.5 per cent during the participation declined marginally from 34.8 per same period. The rise in the shares of FIs/ cent in 2003-04 to 34.0 per cent in 2004-05 MFs/corporates and mutual funds was modest.
73